Coyote Blog

Pursuing what has become a familiar theme on Coyote Blog, we again revisit anti-trust, and in the process, discover why the NY Times might be better off putting its editorial inanities back behind a firewall.

Writing about Intel, the NY Times editors say:

The abuse of market power to protect a monopoly hurts consumers and
hinders innovation "” locking out smaller rivals that may have better
products with new features or lower prices. With an 80 percent to 90
percent share of the microprocessor market, Intel wields much more
power than your local supermarket. Its threat to raise prices the
moment a customer tries to buy from rival A.M.D. can lock in even the
largest computer makers "” which depend on Intel for most of their
products and can't simply swap all their processors overnight. And with
such a level of control, Intel doesn't have to exert itself to come up
with new and better products.

Which I guess is why Lotus 1-2-3 must still have a hammerlock on the spreadsheet market, Creative must still dominate in MP3 players, IBM must still own the computer market, and GM must still rule the automotive roost.  How can any sentient human being who has lived through the past 20 years doubt that, particularly in technology, market dominance is as fleeting as the next technology cycle.   In fact, AMD several years ago made a huge penetration of the market with a series of processors a year or two ahead of Intel.  Most average consumers who can't even figure out how to attach a photo to an email never noticed, but among those who understood and cared, AMD ruled the roost.

Oh, and what was Intel's crime?

They say Intel is improperly protecting its stranglehold of the
microprocessor market by offering big discounts and rebates to computer
makers who minimize the use of processors made by rival Advanced Micro
Devices, and punishing those who stray with higher prices.

Oh my god, they are offering discounts to loyal customers!  Don Boudreax gets right to the heart of it:

Monopolists raise prices; firms facing competition do not.  Intel keeps its prices
low, meaning that it behaves competitively.  Yes, Intel's pricing
practices make life more difficult for AMD and other rivals, but that's
what competition is supposed to do.

The popular myth is that anti-trust policy is about protecting consumers.  Well, it may have been at one time or another, but currently it is all about protecting competitors who have political pull.  The Europeans are shameless about this, using anti-trust as a bludgeon to hamstring US companies who are out-competing EU home-grown competitors.  Now the NY Times wants to emulate this practice, explicitly calling on the government to force Intel to raise prices to make things easier for its competitors.

Update:  By the way, is there anyone out there who thinks Dell or H-P don't get the best possible pricing from Intel, with or without AMD purchases?  The coy little personal shopping example in the opening paragraph of the editorial is probably to help the reader forget that we are talking about Intel selling to customers who are big boys too.

Thanks to a reader comes this article from the NY Times that yet again discusses a water shortage and possible government action without once mentioning the word "price."  If water prices floated like gas prices, we wouldn't have to discuss things like these:

Within two weeks, Carol Couch, director of the Georgia Environmental
Protection Division, is expected to send Gov. Sonny Perdue
recommendations on tightening water restrictions, which may include
mandatory cutbacks on commercial and industrial users.

If that
happens, experts at the National Drought Mitigation Center said, it
would be the first time a major metropolitan area in the United States
had been forced to take such drastic action to save its water supply.

But of course politicians love being responsible for resource allocation through command-and-control government, because it creates winners and losers and both will then donate to the next election cycle.  Atlanta already has fairly expensive water, but a quick 50% rate hike about 3 months ago would have likely obviated this shortage while also providing the municipality with additional funds to develop new sources.

I wrote a lot more about water scarcity and the price mechanism, including the observation that Phoenix ridiculously has some of the lowest water prices in the country, here.

postscript: One of the media tricks to make things look worse and panicky is to present asymmetric charts.  For example, the NY Times presents this drought map:

All you see is what one presumes to be normal in white and then a lot of drought.  But in fact, this chart is truncated.  It omits all the data for areas that are wetter than usual.  Here is the chart for September form the NOAA with both over and under precipitation over the past 12 months:

Whoa, that shows a different picture, huh?  Basically, about as much stuff is wetter than normal as drier than normal.  Which is exactly what one might expect in any period.  And by the way, if you look at the last five years, the US is pretty freaking wet:

The NY Times outdid itself last week with a truly awful article on dentistry.  They started with just one fact:

Previously unreleased figures from the Centers for Disease Control and Prevention
show that in 2003 and 2004, the most recent years with data available,
27 percent of children and 29 percent of adults had cavities going
untreated. The level of untreated decay was the highest since the late
1980s and significantly higher than that found in a survey from 1999 to
2002.

They then apply the patented NY Times class-based story-generation model to assume a cause for this rise that is not supported by the study itself:

But many poor and lower-middle-class families do not receive adequate
care, in part because most dentists want customers who can pay cash or
have private insurance, and they do not accept Medicaid
patients. As a result, publicly supported dental clinics have
months-long waiting lists even for people who need major surgery for
decayed teeth. At the pediatric clinic managed by the state-supported University of Florida dental school, for example, low-income children must wait six months for surgery.

So is the rise in untreated dental problems concentrated in the poor?  Well, they don't say, and there is not data for that in the study, but that does not prevent the NY Times from just assuming it to be so.  In fact, the article itself contradicts this premise, by noting that the problem is not limited to the poor:

The lack of dental care is not restricted to the poor and their
children, the data shows. Experts on oral health say about 100 million
Americans "” including many adults who work and have incomes well above
the poverty line "” are without access to care.

By the way, how did they figure a 100 million don't have "access"?  I don't know, but the figure is suspiciously close to this one:

With dentists' fees rising far faster than inflation and more than 100 million people lacking dental insurance...

Anyone want to bet that the NY Times just made its usual logical fallacy of equating lack of insurance with lack of access?  And by the way, dental insurance is a HORRIBLE investment.  I have priced it many times myself and for a normal family, it is much cheaper to just pay the dental bills, particularly since there are not that many things in your mouth that can go wrong that will be bankrupting.  Trying to push everyone to dental insurance is a terrible idea.  Every time there is a dental procedure in our family, it turns out there are several options for fixing it at different prices.  We actually have the incentive to ask for these alternatives and make trade offs.  What do you think would happen if we had insurnace?

In fact, I can think of a LOT of reasons why people don't go to the dentist as often as they should.  One reason is that no one like the dentist.  Another is people's busy schedules.  And certainly rising costs are a factor -- As I mentioned before, our family makes very different decisions about treatment options than we used to with a fat corporate dental plan.  Which is as it should be. 

By the way, note the screaming socialism here:

The dental profession's critics "” who include public health experts,
some physicians and even some dental school professors "” say that too
many dentists are focused more on money than medicine.

"Most
dentists consider themselves to be in the business of dentistry rather
than the practice of dentistry," said Dr. David A. Nash, a professor of
pediatric dentistry at the University of Kentucky. "I'm a cynic about my profession, but the data are there. It's embarrassing."

I wonder.  Does Dr. Nash accept a salary for being a professor?  Then I guess he is focused more on the business of education than the practice of educating.

Oh, and by the way, how is socialism in dentistry working out?

In a survey of 5,000 people in the UK, six percent claimed that
they had done DIY dentistry, including yanking their own teeth and
fixing cracked crowns with glue. Apparently they resorted to such self
treatment because they couldn't get in to see a National Health Service
dentist "¦

One respondent in Lancashire, northern England, claimed to
have extracted 14 of their own teeth with a pair of pliers. In
Liverpool, one of those collecting data for the survey interviewed
three people who had pulled out their own teeth in one morning.

"I took most of my teeth out in the shed with pliers. I have one to go," another respondent wrote.

Yesterday, I talked about my fondness for private conservation projects.  Today, the NY Times makes it clear that they are not so fond of private conservation.  In an article about environmentalist-triggered death of logging in the west, the Times observes that many rich folks are taking up the opportunity to buy large tracts of western forests for second homes and ranches.

William P. Foley II pointed to the mountain. Owns it, mostly. A timber
company began logging in view of his front yard a few years back. He
thought they were cutting too much, so he bought the land.

Mr. Foley belongs to a new wave of investors and landowners across the
West who are snapping up open spaces as private playgrounds on the
borders of national parks and national forests.

Cool, a win-win -- conservation without use of tax funds or government coersion.  But instead of being thrilled, the Times adopts their patented sneering tone they use with anything having to do with wealth.

The rise of a new landed gentry in the West is partly another
expression of gilded age economics in America; the super-wealthy elite
wades ashore where it will.

Hmm, I would have thought it an example of how increases in wealth in the US has always driven higher environmental standards and more conservation.  The NY Times tries to portray this as something like turning national parks into sprawling suburbs, lamenting the "increase in density," but this is just a joke and a product of a bunch of New Yorkers who have never really spent time in Montana.  There is zero danger of any kind of urbanization here, and their very story belies this fact when it talks about 640 acre lot sizes. 

The real problem for them seems to be one of access, and they lament that these new owners tend to put up no trespassing signs rather than allowing public access as private loggers used to.  But in so arguing, the Times is trying to have it both ways.  Eliminating recreation access from western lands is a HUGE priority for environmentalists.  In fact, though many in America don't know it, within a few decades it may be impossible to drive into national parks like Yellowstone and Yosemite.  I know and work with the management of the National Parks, and many of their leaders do not consider their job finished until they get all the visitors out of the parks.  So throwing up no trespassing signs to recreators is exactly what environmentalists want on these lands.  What they don't like, because many are openly socialist, is private ownership of these lands.  They know that increasingly, because they have gotten so good at filing lawsuits and forcing public lands officials to do their bidding, that public ownership means, effectively, ownership by the environmental groups. 

I understand the logic behind reporter shield laws.  However, I can't support the establishment of different classes of citizenship with different rights, particularly when these rights are tied to certain professions.  Either everyone should be able to ignore a subpoena, or nobody should be able to do so.   My individual rights should not be subject to a hiring decision by the NY Times.

For those who believe this is essential to the functioning of the press, it is left as an exercise to explain how the press has survived without it for over 200 years.

It is worth noting that this is effectively an extension of what Congress began with McCain-Feingold.  In that law, Congress gave members of the press unique speech rights within 60 days of an election that the rest of us do not have.  The press tries to piously portray itself as a special entity, but they sure do look like any other special interest group lobbying Congress for special privileges.

Much more here.

Regulation is a frequent topic on this blog, and one of the points I try to make over and over is that most supposedly pro-consumer regulation is in fact put in place to protect incumbents from competition and new entrants.   It's worth repeating this Milton Friedman quote:

The justification offered is always the same: to protect the consumer. However, the reason
is demonstrated by observing who lobbies at the state legislature for
the imposition or strengthening of licensure. The lobbyists are
invariably representatives of the occupation in question rather than of
the customers. True enough, plumbers presumably know better than anyone
else what their customers need to be protected against. However, it is
hard to regard altruistic concern for their customers as the primary
motive behind their determined efforts to get legal power to decide who
may be a plumber.

Apparently, the NY Times has discovered the phenomenon, and argues that it is accelerating under the Bush administration.  I have no evidence to refute this claim, though I note that the NY Times offers no evidence in support of it either.

Never-the-less, it certainly is a feature of most governments to try to protect politically powerful businesses against competitors, foreign and domestic.  Basically, the entire German and French economy is built on this practice, which is why the top corporations in these countries in 1960 are still the top companies today, whereas the list has completely turned over in the US.  Our economy thrives because of entrepreneurship.  New entrants replace senescent competitors, or at least keep the pressure on them so they stay sharp and focused.

This is an enormous issue in my business.  My industry is characterized by about 4-5 larger companies that operate many recreation facilities, of which we are one, and hundreds or perhaps thousands of individual operators.  Over the last five years, the US and state governments have passes a myriad of rules and regulations that are making it virtually impossible for smaller companies to compete.  I don't know if these are being suggested by any of the larger players (they certainly aren't coming from me) but these regulations are serving the purpose of strangling smaller competitors and making it nearly impossible for new entrants to compete.

Growing up in Houston, one of the odder parts of the city, even for a local, is the underground tunnel system downtown.  The system was built, I presume, because you can't even cross the street in the summer time in 100 degree / 100% humidity weather without sweating through your suit coat.  The tunnel system has become quite extensive, such that you can navigate for miles without ever seeing the light of day.  Casual observers often comment on the lack of pedestrian traffic in downtown Houston, but that is perhaps because they never looked under ground.  Over time, underground shopping malls and restaurants and food courts appeared along the tunnels, bringing even more people under ground.

The tunnels are especially difficult to navigate, because there are no visual clues (e.g. we are heading to that building over there) and no signs.  We used to joke people had been lost down there for decades.

Well, the secret is apparently out, as the NY Times has discovered the Houston tunnels.

Seared by triple-digit heat and drenched by tropical storms, midday
downtown Houston appears eerily deserted, the nation's fourth-largest
city passing for a ghost town.

On the street, that is.

But
below, there are tunnels at the end of the light "” nearly seven
color-coded miles of them connecting 77 buildings "” aswarm with
Houstonians lunching, shopping and power-walking in dry, air-chilled
comfort....

"Nothing says north, south, east or west. You have to memorize the
buildings," said David Gerst, a lawyer who opened a lucrative sandwich
shop "” BeWitched "” off the East McKinney (green) tunnel network under
Commerce Towers, the former Chamber of Commerce building converted to
condominiums. For access to the 3,000 people who stream by his shop
each lunchtime in what tunnel merchants call the holy hours, Mr. Gerst
pays $2,500 a month rent for 800 square feet, more than what surface
lunch space may command.

This is the best part:

It was not centrally planned; it just grew, inspired by Rockefeller
Center in New York. But it is not connected to a transit network. And,
befitting Texans' distrust of government, most of it is private; each
segment is controlled by the individual building owner who deigns to
allow the public access during business hours "” and then locks the
doors on nights and weekends. Some parts, like those belonging to the
former Enron buildings now leased by Chevron, are closed to outsiders
altogether.

Eliot Spitzer has been caught using the power of his office to go after his enemies.  Wow, what a surprise.  Frequent readers of this blog will know I don't think much of Spitzer, who tended to overreach his office all the way back to student government at Princeton.  What I found surprising, though, was this quote from the NY Times:

The report was a blow to Mr. Spitzer, a former prosecutor who came into
office less than seven months ago with a reputation for integrity and
who promised to bring a new ethical climate to Albany.

A reputation for integrity with whom?  Mr. Spitzer, as attorney general, was a sort of liberal bookend to George W. Bush, consistently exceeding the limits of his authority to achieve some goal he argued trumped a narrow reading of the law.  His supporters, just as Bush's do, justify his overreaching his office on the grounds that the ends justified the means, in Spitzer's case the assault on various corporate and Wall Street firms liberals were frustrated that Washington would not pursue.  Critics like myself argued that many of his crusades were abuses of his prosecutorial office to pursue personal vendetta's and to generate headlines to position himself for a run for governor.

I would think that any reasonable definition of "integrity" when applied to an attorney general would include a respect for the letter of the law, something that even his supporters would probably admit Spitzer cast aside when he thought it was for a good cause.  The only interpretation of "integrity" I can come up with in the context of this article is that Spitzer had integrity in the past because his abuses of power were in pursuit of causes the author agreed with.

Look, this is the man that began supporting campaign finance limitations, which tend to support incumbents, starting the day after he became an incumbent.  This is the man who described himself as governor thus:  "I
am a fucking steamroller and I'll roll over you or anybody else".  This is the man who involved the State of New York and the courts in a private compensation deal, just to burnish his populist credentials.  In the latter trial, he explicitly left prominent Democrats who had the most involvement with the deal alone and indicted side figures who were Republicans.  Tom Kirkendall has a much longer bill of particulars against Spitzer here.

Newsweek:

The press needed there to have been a rape to keep the story going. It
was much too dull to consider that the lacrosse players deserved the
presumption of innocence.

Of course, there is nothing new under the sun, as I am sure you could find the same problem 100 years ago.  But it does give one perspective when the MSM tries to go all high and mighty on us, particularly the always arrogant NY Times, which cheer-led the virtual lynching and went out of its way to prop up the failing DA's case when nearly everyone else was starting to see the holes in it.  The Rutgers basketball team got an apology from the media figure that slighted them.  Don't expect the same treatment for the Duke boys.

And there is no better place to find them than in the NY Times:

So there are these two muffins baking in an oven. One of them yells, "Wow, it's hot in here!"And the other muffin replies: "Holy cow! A talking muffin!"

Did that alleged joke make you laugh? I would guess (and hope) not.

Well, I laughed, and I was alone in the room.  I am fine if you don't think it is funny, so to guess that I did not find it funny is fine, but to hope so?

I guess it's become de riguer to take a shot at Joseph Rago's editorial in the WSJ the other day, saying in part:

Some critics reproach the blogs
for the coarsening and increasing volatility of political life. Blogs,
they say, tend to disinhibit. Maybe so. But politics weren't much
rarefied when Andrew Jackson was president, either. The larger problem
with blogs, it seems to me, is quality. Most of them are pretty awful.
Many, even some with large followings, are downright appalling.

Every conceivable belief is on the
scene, but the collective prose, by and large, is homogeneous: A tone
of careless informality prevails; posts oscillate between the uselessly
brief and the uselessly logorrheic; complexity and complication are
eschewed; the humor is cringe-making, with irony present only in its
conspicuous absence; arguments are solipsistic; writers traffic more in
pronouncement than persuasion . . .

I haven't really posted on this editorial any more than I have posted on the commercials I hear every day for FM radio telling me how bad satellite radio is, and how much I should enjoy hearing 15 minutes of commercials an hour rather than paying $30 a month in fees.  There is a consistent human behavior which tends not just to be threatened but to be outraged by upstart competitors.  Remember this story on the milk cartel  -- entrenched interests are flabbergasted that anyone would even attempt to compete with them in a new way.  New competitors are not just bad and unworthy, they are portrayed as threatening all the good things that already exist.

Now that I am started, though, here are a few other random thoughts:

• It is inappropriate to compare single blogs to individual newspapers.  The WSJ has hundreds of reporters, while most blogs have one.  In making such a comparison, one is comparing a brain on one hand with a single brain cell on the other.  Blogs have much of their value as a network or swarm, in how the individual "cells" interact with each other and complement each other.  We might read one or two iterations of the daily fishwrap each day, but I read at least 30 blogs, all aggregated together for me in a convenient form by Google Reader.  And these thirty are augmented by links that I follow to as many as a hundred other blogs each week to learn more about individual issues.
• I don't particularly disagree with this statement:

The blogs are not as significant
as their self-endeared curators would like to think. Journalism
requires journalists, who are at least fitfully confronting the digital
age. The bloggers, for their part, produce minimal reportage. Instead,
they ride along with the MSM like remora fish on the bellies of sharks,
picking at the scraps.

Few bloggers would disagree with this view that we depend on the reporting of the MSM for a starting point of much of what we do.  However, I would probably argue that some of the scraps we are picking up are larger than Rago would concede.  By the way, if you leave out a few papers like the NY Times, I could make the same accusation against 99% of the papers in this country, arguing that they are riding on the backs of the wire services, only doing a small percentage of their own reporting.  What's the difference?

• One of the reasons there are so many scraps left for us blogger-remoras is that newspapers load up on people whose education and entire professional career is in writing and journalism, rather than in economics or business or law or science whatever they are writing about.  You can just see the institutional hubris in Rago's complaint quoted above about the quality of the prose and the humor, longing for real journalists who can use logorrheic and solipsistic in the same sentence (not to mention four commas, five semi-colons, one colon, and one set of ellipses).   So while newspapers load up on journalism and English majors who write lovely and witty prose, blogs are written by leading economists, legal practitioners and professors, successful business people, technology experts of every stripe, etc. etc.  No newspaper, for example, has even one tenth the economic firepower the combination of Cafe Hayek, Marginal Revolution, the Knowledge Problem, and the Mises Blog, among many others, bring to my desktop.  Ditto for Volokh / Scotusblog / Instapundit / Overlawyered / Tom Kirkendall on legal issues. [Update:  Oh, and a lot of those other bloggers are, uh, journalists]
• One of the mistakes newspaper-types make in comparing newspapers to blogs is that they compare the reality of blogs with the ideals of newspapers, particularly on things like sourcing and fact-checking.  However, it's becoming clear that this comparison is increasingly unfair, because the reality of newspapers is diverging a fair amount from their ideals.  Of course, we all tend to fall short of our ideals.  But what is worrying about newspapers is that those who purport to be gaurdians and watchdogs of these ideals are increasingly becoming appologists for their violation.  How many times are we going to hear the "fake but accurate" response to blogger accusations of problems in MSM sourcing?
• I will concede that the Mr. Rago's employer the WSJ is one of the few newspapers that really understand how they create value, or at least are consistent in their value story and their pricing policy.  If, as Rago and others argue, it is the reportage that is of value and editorializing is just the remora, then shouldn't it be the reporting behind the firewall and the editorials out front?  This is how the WSJ does it, but for some odd reason the NY Times does it just the opposite:  They let everyone have access for free to the output of their uniquely large and talented reporter pool, but put the confused economic rantings of Paul Krugman and Maureen Dowd behind a paid firewall.  Huh?

It would be tough for me to single out my single least favorite member of my alma mater Princeton's faculty.  However, Peter Singer would certainly be in the running.  TJIC fisks some of Singers recent writing in the NY Times.  I will leave you to read his thoughts, except I wanted to comment on this paragraph of Singer's:

"¦The rich must - or so some of us with less money like to assume -
suffer sleepless nights because of their ruthlessness in squeezing out
competitors, firing workers, shutting down plants or whatever else they
have to do to acquire their wealth"¦

I could probably write a book just from this quote, but let me just focus on two responses:

• It helps prove my long-time observation that politicians, artists, and academics of a socialist bent who frequently criticize business have absolutely no idea what they do day to day or how they make money or create value.  Most have been an artist/academic/politician since the day they left school, and if they have held a real job in the value-creation part of the world, it is seldom as any type of manager or supervisor.  Singer knows no more about wealth creation than I do about sub-atomic particles.  The amazing thing, though, is that the NY Times would never quote me on sub-atomic particles but frequently gives Singer a platform to hold forth about wealth creation.  Economics is a science too, just as much as physics.  As I said in that linked post:

Economics is a science.  Willful ignorance or emotional
rejection of the well-known precepts of this science is at least as bad
as a fundamentalist Christian's willful ignorance of evolution science
(for which the Left so often criticizes their opposition).  In
fact, economic ignorance is much worse, since most people can come to
perfectly valid conclusions about most public policy issues with a
flawed knowledge of the origin of the species but no one can with a
flawed understanding of economics.

• Read the statement, and really think about what he says, remembering that he really believes these exact words.  Forget about the squeezing out competitors part -- presumably we capitalists are just bashing each other so this is likely the least of his arguments (not to mention how many people Singer likely "squeezed out" in the competition for scarce tenure and professor positions at Princeton).  Think about his statement that the way wealth is created is by "firing workers" and "shutting down plants."  So the logical implication is that the corporation who ends up with no workers and not assets will be the richest?  And here all this time I have been stupidly growing my company by trying to hire more good people and add on productive assets. 

Singer is as qualified to write about business practices as I am to write about South East Asian mating rituals.  Each of us is equally experienced and knowlegeable about these topics.  Somehow, though, the NY Times sees fit to publish Singer and my beloved University pays him to teach.  Unbelievable.

Kevin Drum, building on a story from the NY Times, uses data from the California Energy Commission to make the case that California is the most efficient user of electricity in the country and that this efficiency can be attributed sole to government intervention.  Drum, always on the lookout for an excuse for the government to take over some sector of the economy, concludes:

Anyway, it's a good article, and goes to show the kinds of things we
could be doing nationwide if conservative politicians could put their
Chicken Little campaign contributors on hold for a few minutes and take
a look at how it's possible to cut energy use dramatically "” and reduce
our dependence on foreign suppliers "” without ruining the economy. The
energy industry might not like the idea, but the rest of us would.

On its face, California's numbers are impressive.  The CEC's numbers show California to have the lowest per capita electricity use in the nation, using electricity at half the national rate and one quarter the "least efficient" states.

This would be really cool if it were true that a few simple public policy steps could cut per capital energy consumption in half.  Unfortunately, though I am willing to posit California is better than average (as any state would be with a mild climate and newer housing), the data doesn't say what Drum and the article are trying to make it say. 

The consumption data is from here.  You can see that there are three components that matter - residential, commercial, and industrial.  Residential and commercial electricity consumption may or may not be fairly apples to apples comparable between states (more in a minute).  Industrial consumption, however, will not be comparable, since the mix of industries will change radically state by state.  As an extreme example, states with high aluminum production or oil refining or steel making, which are electricity intensive, will have a higher per capita industrial electricity consumption, irrespective of public policy.  The graph Drum and the NY Times uses includes industrial consumption, which is a mistake -- it is more reflective of industry mix than true energy efficiency.

Take two of the higher states on the list.  Wyoming, at the top of the per capita consumption list, has industrial electricity consumption as a whopping 58% of total state consumption.  KY, also near the top, has industrial consumption at 50% of total demand.  The US average is industrial consumption at 29% of total demand.  CA, NY, and NJ, all near the bottom of the list in terms of per capital demand, have industrial use as 20.6%, 15.1%, and 16% respectively.  So rather than try to correlate electricity consumption to local energy regulations, it is clear that the per capita consumption numbers by state are a much better indicator of the presence of heavy industry. In other words, the graph Drum shows is actually a better illustration of the success of CA not in necessarily becoming more efficient, but in exporting its pollution to other states.  No one in their right mind would even attempt to build a heavy industrial plant in CA in the last 30 years.  The graph is driven much more by the growth of industrial electricity use outside CA relative to CA.

Now take the residential numbers.  Lets look again at the states at the top of the per capita list:  Alabama, South Carolina, Louisiana, Tennessee, Arkansas, Mississippi, Texas.  Can anyone tell me what these states have in common?  They are hot and humid.  Yes, California has its hot spots, but it has its mild spots too  (also, California hot spots are dry, so they can use more energy efficient evaporative cooling, something that does not work in the deep south).  These southern states are hot all over in the summer.  So its reasonable to assume that maybe, just maybe, some of these hot states have higher residential per capita consumption because of air conditioning load?  In fact, if one recast this list as residential use per capita, you would see a direct correlation to summer air conditioning loads.   This table of cooling degree days weighted for population location is a really good proxy for how much air conditioning is needed by state.  (Explanation of cooling degree days). You can see that states like Alabama and Texas have two to four times the number of cooling degree days than California, which should directly correlate to about that much more per capita air conditioning (and thus electricity) use.

In fact, I have direct knowledge of both Alabama and Texas.  Both have seen a large increase in residential per capita electricity use vis a vis California over the last thirty years.  Granted.  But do you know why?  The number one reason for increased residential electricity use in the South is the increased access of the poor, particularly poor blacks, to air conditioning.  It is odd to see a liberal like Drum railing against this trend. Or is it that he just didn't bother to try to understand the numbers?

OK, now I have saved the most obvious fisking for last.  Because even when you correct for these numbers, California is pretty efficient vs. the average on electricity consumption.  Drum attributes this, without evidence, to government action.  The NY Times basically does the same, positing in effect that CA has more energy laws than any other state and it has the lowest consumption so therefore they must be correlated.  But of course, correlation is not equal to causation.  Could there be another effect out there?

Well, here are the eight states in the data set above that the California CEC shows as having the lowest per capita electricity use:  CA, RI, NY, HI, NH, AK, VT, MA.  All right, now here are the eight states from the same data set that have the highest electricity prices:  CA, RI, NY, HI, NH, AK, VT, MA.  Woah!  It's the exact same eight states!  The 8 states with the highest prices are the eight states with the lowest per capita consumption.  Unbelievable.  No way that could have an effect, huh?  It must be all those green building codes in CA.  I suspect Drum is sort of right, just not in the way he means.  Stupid regulation in each state drives up prices, which in turn provides incentives for lower demand.  It achieves the goal, I guess, but very inefficiently.  A straight tax would be much more efficient.

Please, is there anyone in the "reality-based community" that cares that their data really is saying what they think it is saying??

The NY Times is working to help the left coalesce its strategy for the upcoming elections, and it is pushing the notion that Wal-Mart represents everything that is wrong with the economy and that the Wal-Mart effect (supposedly holding down wages to augment profits) has caused real wages and middle class earnings to stagnate.

I have been addressing some of this piecemeal, but it also occurred to me that something is different over the last two decades that radically effects average wages - that is, immigration.  This is not the "immigration drags down other people's wages" argument, something that most economists have debunked.  But since immigrants, legal or not, are new in the labor force, have fewer skills, and don't always have good English skills, their wages are lower.  My guess is that these lower immigrant wages bring down the average, and are one reason for apparent stagnation of wages.

The solution to this would be to do a time-series study - don't look at the average, but look at the same people and see what happened to their wages.  My sense is that most everyone in the pool is experiencing improving wages, but the fact that new people are entering the pool at the bottom of the wage ladder keeps the average wages for the whole pool flat.

From the NY Times:

People of Valentin Keller's era [mid 19th century], like those before and after them,
expected to develop chronic diseases by their 40's or 50's. Keller's
descendants had lung problems, they had heart problems, they had liver
problems. They died in their 50's or 60's.

Now, though, life has changed. The family's baby boomers are reaching middle age and beyond and are doing fine.

"I feel good," says Keller's great-great-great-grandson Craig Keller.
At 45, Mr. Keller says he has no health problems, nor does his
45-year-old wife, Sandy.

The Keller family illustrates what may
prove to be one of the most striking shifts in human existence "” a
change from small, relatively weak and sickly people to humans who are
so big and robust that their ancestors seem almost unrecognizable.

Scientists are looking for the explanation of a generation of humans so much stronger and healthier than those who preceded them.  Hypotheses seem to center on pre-natal maternal health and early life nutrition.  But I can give the bigger picture answer:  wealth.  Not Bill Gates wealth, but the generally enormous increase in wealth, even among the poorest Americans.  I discussed this issue along with other related ones in this article on wealth creation.  And this cartoon seems relevant.  Also makes you wonder about whether the obsession with obesity nowadays makes much sense.

The biggest surprise emerging from the new studies is that many chronic ailments like heart disease,
lung disease and arthritis are occurring an average of 10 to 25 years
later than they used to. There is also less disability among older
people today, according to a federal study that directly measures it.
And that is not just because medical treatments like cataract surgery
keep people functioning. Human bodies are simply not breaking down the
way they did before.

Even the human mind seems improved. The
average I.Q. has been increasing for decades, and at least one study
found that a person's chances of having dementia in old age appeared to
have fallen in recent years....

People
even look different today. American men, for example, are nearly three
inches taller than they were 100 years ago and about 50 pounds heavier.

A nice perspective to maintain during modern media-fed health panics.

Update:  Brian Doherty makes a similar observation.

Per the NY Times:

As he left the soccer field after a club match in the eastern German
city of Halle on March 25, the Nigerian forward Adebowale Ogungbure was
spit upon, jeered with racial remarks and mocked with monkey noises. In
rebuke, he placed two fingers under his nose to simulate a Hitler mustache and thrust  his arm in a Nazi salute.

In April, the American defender Oguchi Onyewu, playing for his
professional club team in Belgium, dismissively gestured toward fans
who were making simian chants at him. Then, as he went to throw the
ball inbounds, Onyewu said a fan of the opposing team reached over a
barrier and punched him in the face....

Players and antiracism experts said they expected offensive behavior
during the tournament, including monkey-like chanting; derisive
singing; the hanging of banners that reflect neofascist and racist
beliefs; and perhaps the tossing of bananas or banana peels, all
familiar occurrences during matches in Spain, Italy, eastern Germany
and eastern Europe.

I am sure many American black athletes still have stories to tell about encountering racism, but didn't we at least climb out of this kind of pit of overt racism forty years ago or so?  While European sophisticates have looked down their noses at US racial problems, European monocultures seem now not to be ahead of us but behind us in dealing with ethnic diversity.  Though there do seem to be plenty of Americans who long to take our country back to being a monoculture.

Tom Kirkendall has another excellent roundup of the Lay/Skilling trial.  According to Kirkendall, the prosecution is having some trouble, and in fact have wandered pretty far afield from their original indictment (a document that the prosecution now actually has disowned).  In effect, Lay and Skilling seem to be being tried for different things than they were ostensibly brought to trial for.  Most interesting is this:

On the other hand, the Task Force's case to date has wandered away from
the SPE's, so there is a decent chance that a difficult-to-control
Fastow could end up being a not-so-important witness in the
ever-changing big scheme of this corporate criminal case of the decade.

If Kirkendall is reading the trial correctly, and the SPE's and Fastow's testimony are becoming irrelevant, then the trial has virtually nothing to do with anything we have heard about in the media about Enron.

Barrionuevo and Eichenwald, who have been following the trial for the NY Times, agrees that the government case is shifting but believe it is due to the strength of what has been presented so far.

A steady drumbeat of damaging testimony in the five-week-old criminal trial against the former chief executives, Jeffrey K. Skilling and Kenneth L. Lay,
has led legal experts to praise the government case presented so far.
That has raised questions about the risks prosecutors would run by
putting Mr. Fastow, the former chief financial officer, on the stand as
early as Tuesday.

I haven't followed the testimony in any depth, so I can't choose from these two point of views, except to say that the government tactics of essentially changing the charges mid-trial and suppressing defense witnesses by naming a record number as unindicted co-conspirators may or may not be effective, but strike me as fairly scary abuses of the justice system.

Check out this very nice NY Times article (I think it is outside the firewall) on Harvard economist Edward Glaeser and his takes on urban economics and housing markets.  One study of his that resonates with me is his research about just how much modern regulation and zoning is contributing to the high cost of housing:

Glaeser and several colleagues considered two explanations. First, the
possibility that builders in the metro area were running out of land and that
home prices reflected that scarcity. The second hypothesis was that building
permits were scarce, not land. Had the 187 townships in the metro area created a
web of regulations that hindered building to such a degree that demand far
outstripped supply, driving prices up?

Almost as a rule, Glaeser is skeptical of the lack-of-land argument. He has
previously noted (with a collaborator, Matthew Kahn) that 95 percent of the
United States remains undeveloped and that if every American were given a house
on a quarter acre, so that every family of four had a full acre, that
distribution would not use up half the land in Texas. Most of Boston's metro
area, he concluded, wasn't particularly dense, and even in places where it was,
like the centers of Boston and Cambridge, there was ample opportunity to
construct higher buildings with more housing units.

So, after sorting through a mountain of data, Glaeser decided that the
housing crisis was man-made. The region's zoning regulations "” which were
enacted by locales in the first half of the 20th century to separate residential
land from commercial and industrial land and which generally promoted the
orderly growth of suburbs "” had become so various and complex in the second half
of the 20th century that they were limiting growth. Land-use rules of the 1920's
were meant to assure homeowners that their neighbors wouldn't raise hogs in
their backyards, throw up a shack on a sliver of land nearby or build a factory
next door, but the zoning rules of the 1970's and 1980's were different in
nature and effect. Regulations in Glaeser's new hometown of Weston, for
instance, made extremely large lot sizes mandatory in some neighborhoods and
placed high environmental hurdles (some reasonable, others not, in Glaeser's
view) in front of developers. Other towns passed ordinances governing sidewalks,
street widths, the shape of lots, septic lines and so on "” all with the result,
in Glaeser's analysis, of curtailing the supply of housing. The same phenomenon,
he says, has inflated prices in metro areas all along the East and West Coasts.

One of his other areas of research was new to me.  Glaeser argues that the long-lived nature of housing is part of what keeps cities like Detroit and St. Louis around long after the economic and demographic logic would have had them die. 

Glaeser and Gyourko determined that the durable nature of housing itself
explains this phenomenon. People can flee, but houses can take a century or more
to finally fall to pieces. "These places still exist," Glaeser says of Detroit
and St. Louis, "because the housing is permanent. And if you want to understand
why they're poor, it's actually also in part because the housing is permanent."
For Glaeser, this is the story not only of these two places but also of Buffalo,
Baltimore, Cleveland, Philadelphia and Pittsburgh "” the powerhouse cities of
America in 1950 that consistently and inexorably lost population over the next
50 years. It is not just that there were poor people and the jobs left and the
poor people were stuck there. "Thousands of poor come to Detroit each year and
live in places that are cheaper than any other place to live in part because
they've got durable housing still around," Glaeser says. The net population of
Detroit usually decreases each year, in other words, but the city still attracts
plenty of people drawn by its extreme affordability. As Gyourko points out, in
the year 2000 the median house price in Philadelphia was $59,700; in Detroit, it
was $63,600. Those prices are well below the actual construction costs of the
homes. "To build them new, it would cost at least $80,000," Gyourko says, "so
there's no builder who would build those today. And as long as those houses
remain, the people remain."

There's a lot more in the article, including a positive economic take on the role of roads and automobiles that he sets in counterpoint to the typical aesthetic arguments against sprawl. 

I found this next bit supremely ironic, though it matches my observations of these cities as well:

Zoning and housing supply ultimately determine not only who lives in a city but
also the very nature of these places. Boston, San Francisco and Manhattan are
obviously becoming rarefied destinations, mostly for America's elites (Glaeser
calls the cities "luxury goods"), with housing floating beyond the reach of the
young and the middle class. These cities' economies are in the process of
becoming boutique, too, accommodating only the most skilled and privileged.
Their desire to limit construction and grow not in buildings and population but
in prices has, in effect, begun to shape their destiny.

Residents of these cities turn up their noses at the aesthetics and red-state politics of places like Houston and Phoenix, piously believing that all the while they are the true friends of the poor, while at the same time putting in place a government-enforced housing system that only the rich can afford, driving those of moderate incomes to, well, Houston and Phoenix.

This last observation provides a fitting conclusion:

And what surprises him is that the changes in how we have treated property
rights for the last 40 years "” who gets permission to build, the size and
location of what owners are permitted to build "” have been the subject of
virtually no national dialogue, even as the effects on prices, in his view, have
been extraordinary.

I am running a three-day off-site for my managers this week, so I am pretty tied up.  I do, however,  want to take a second to observe that the NY Times should be embarrassed by their stance on these cartoons.  Their lame-ass explanation that the immediate cause for a wave of world-wide violence and rioting is not really newsworthy is so transparently bullshit as to be unbelievable. 

And to argue that the cartoons are somehow too inflammatory is just pathetic.  As I posted earlier, these cartoons are nothing.  Hell, check out stuff like this, syndicated by the NY Times.  Clearly the cartoon shown is inflammatory against the US military (as is their right under the 1st amendment), so the issue of being inflammatory is a dodge too.  Hell, the NY Times has run multi-part series designed specifically to inflame people against the rich and successful, or more recently to inflame people against oil companies.  To to say they avoid being inflammatory as a policy is a bald-faced lie.  The fact is that there is an unwritten code today among the intelligentsia as to who it is "OK" to be inflammatory against and who it is not.  It is OK under the code accepted by the NY Times to be inflammatory against rich and successful people, white males, women and minorities who are not Democrats, Christians, the military, and the US in general.  It is not OK to be inflammatory against Muslims, suicide bombers, women's groups, most academics, advocacy groups, or the leader of the NAACP.  In the case of the cartoons above, it is OK to blame Islamic terrorism on the US military, but not OK to blame Islamic terrorism on the teachings of Islam.

This is a symptom of the same disease that inhabits politically correct speech codes at universities.  Specifically, institutions are increasingly banning speech that is "insulting" or "degrading" or "offensive", and then allowing some (but not all groups) of listeners to set the definition of when they consider themselves offended.  Muslims argue that these cartoons are hateful - so the Times reaction is "oh, we are so sorry, we won't publish them."   Can you imagine the NY Times giving executives at Exxon the same ability to define certain speech as insulting to them and therefore out of bounds of publication?  Sure.

I got several emails to my first post that boiled down to the following, "Coyote, what you don't understand is that we in America may not think there is anything out of bounds with those cartoons, but Muslims really are offended by them."  This is exactly my point - what other groups do we allow to effectively get a veto on the press coverage they receive?  Do we give the military the right to say "gee, that cartoon is hurtful to us, don't publish it".  No, and in fact this was just proved recently with the Tom Toles cartoon.  We give military leaders the right to say the first part, that they think is wrong for such and such reason, but we don't give them a veto over publication.  Nor, of course, should we give such a veto to anyone.  So why do we make an exception for people whose idea of political discourse is to burn down some embassies, kill a few priests, and set off a few bombs?  I would love to see the WaPo explain why it published (I think rightly) the Toles cartoon in the face of vociferous objects from the Pentagon and American veterans, but won't publish the Danish cartoons in the face of vociferous objections from violent Islamic totalitarian extremists.  Especially when the Muslim reaction to the cartoons is only serving to demonstrate exactly those qualities of Islam that the cartoons were meant to highlight.

At the end of the day, this whole episode I think will be very useful, in finally putting to the forefront the bizarre speech code many of America's intelligentsia have explicitly adopted, a code that absurdly defines exactly the same speech as alternately "healthy" or "offensive" depending on what specific groups are the target of such criticism. 

Earth to Muslims:  Grow up.
Earth to the NY Times:  The time is long overdue for a serious self-awareness episode.

Postscript: Another bit of irony:  The media often criticizes the administration as being the enemy of free speech, when the very fact of the frequent publication of this criticism without any government intervention tends to blunt the force of the argument.  On the other hand, when the group being criticized actually does respond with violence meant to suppress publication, the media decides that the targeted group is not really worthy of criticism.

Update: Here is a compiled excuse page from major US newspapers as to why they are not publishing.  Read it to enjoy the spectacle of supposedly smart and principled people twisting themselves into ethical pretzels.

Update #2:  Those of you who mainly rely on the TV and print media for news probably haven't seen the actual cartoons.  Here they are.  Internet to the rescue again, printing the news that the NY Times deems not fit to print.

The NY Times has a fairly scary (though not particularly surprising) article about unfunded retirement obligations of government bodies.

Thousands of government bodies, including states, cities, towns, school
districts and water authorities, are in for the same kind of shock in the next
year or so. For years, governments have been promising generous medical benefits
to millions of schoolteachers, firefighters and other employees when they
retire, yet experts say that virtually none of these governments have kept track
of the mounting price tag. The usual practice is to budget for health care a
year at a time, and to leave the rest for the future.

Off the government balance sheets - out of sight and out of mind - those
obligations have been ballooning as health care costs have spiraled and as the
baby-boom generation has approached retirement. And now the accounting rulemaker
for the public sector, the Governmental Accounting Standards Board, says it is
time for every government to do what Duluth has done: to come to grips with the
total value of its promises, and to report it to their taxpayers and
bondholders.

Its not too surprising to most of us that the government, which is actively putting Enron managers in jail for hiding liabilities off-balance-sheet, turns out to be a far worse offender at the same practice.  The few agencies that have performed the actuarial calculation are coming up with staggering numbers:

Stephen T. McElhaney, an actuary and principal at Mercer Human Resources, a
benefits consulting firm that advises states and local governments, estimated
that the national total could be $1 trillion. "This is a huge liability," said
Jan Lazar, an independent benefits consultant in Lansing, Mich. "If anybody
understands it, they'll freak out."...

Maryland, for example, now spends about $311 million annually on retiree health
premiums. But when that state calculated the value of the retirement benefits it
has promised to current employees, the total was $20.4 billion. And the yearly
cost will jump to $1.9 billion under the new rule, according to an analysis for
the state by actuaries at Aon
Consulting, which advises companies on benefits.

I usually severely discount consultant scare numbers like "$1 trillion", particularly after the year 2000 bug orgy of doomsaying, but if Maryland, an average size state, is facing $20 billion, then a trillion may only account for state governments.  The number may well be higher when you include cities, counties, school districts, etc. 

While this is clearly bad news, there is also a silver lining.  Politicians for years have given away richer and richer public employee retirement benefits because they appeared "free"  (free to a politician being anything that doesn't have to be paid for when he/she is in office).  By changing accounting standards to force acknowledgment of this liability, politicos will at least have to address true costs of any future giveaways.

As a minimum, most public authorities are looking to change benefits for new employees, which is an entirely reasonable response that should have been taken years ago.  Just as past changes in public accounting for pensions caused agencies to shift benefits to 401K's from defined benefit pensions, so this rule-changes in retiree medical care will certainly change benefits packages.

However, that being said, I have a much bigger problem with several state's proposals to retroactively reduce benefits for existing retirees and employees.  These retirement benefits are a contract, and should not be allowed to be changed casually, any more than could an agency just choose to renege on a municipal bond payment.  Sure, the commitments may have been irresponsible, but that does not make them automatically void.  Private companies from time to time get themselves in a similar mess, and the only way for them to relieve themselves of some of this liability is through the bankruptcy process.  Public agencies should be forced to do the same.  They should not be able to use their coercive legislative power to just make these obligations disappear at the stroke of a pen -- they need to go through the pain of a bankruptcy, where all creditors, not just pensioners selectively, will need to share in the haircut.

I wanted to stream digital music from my main computer in my home office to my main stereo system in the den.  After some research, I chose version 3 of Squeezebox from Slim Devices.  They have taken an open architecture approach that I like, and have a proven history of steadily improving their product.  Most true audiophiles I sought advice from use this device (this is an audio-only device, no video or jpegs streamed).  I am currently converting my entire CD collection to lossless FLAC format audio files using EAC, which seems to be the audiophile favorite for ripping (and it is free).  FLAC compression seems to result in albums 250-450 meg, meaning my 400 CD's will need about 140 gig, which I have available.  I will ditch most of my mp3 files, saving only a subset for iPod rotation.  New mpg files, or whatever rules in the future, can be made directly from the FLAC.

The box itself is small and well-designed.  Setup was a breeze, once I fixed a setting on my firewall.  Now I can point my remote at this box and scroll easily through my music collection (along with a number of Internet radio stations).  No flipping through CD's or yelling at the kids for not alphabetizing them right.  You can browse or search by title, artist, or album.

In addition to controlling it with a remote, I can control it with any computer on the network.  Right now, I choose songs on a laptop in the kitchen, which sends music from the computer in the office to the amp and speakers in the den.  Awesome.  Their web site says that you can also browse your music and choose what's playing from a web enabled PDA, but I have not tried it yet.

Here is the blogger vanity part:  In addition to an array of other screensavers, you can have the device connect to any online RSS feed and scroll the contents marquee-style across the screen.  All day I have had my blog feed scrolling across the device, interspersed with NY Times and ESPN headlines.

Last week I wrote here and here about free speech and the defeat of the bill to protect such speech online.  Matt Welch has more, and wonders as I did why Democrats, who applaud themselves for their staunch support of free speech, have suddenly abandoned the cause:

I was reminded of that neat bit of self-delusion yesterday when reading news
that House Democrats had followed The New York Times' odious
advice to kill
the Online
Freedom of Speech Act, which would have exempted weblogs from Federal
Election Commission campaign finance rules. Once again, the party supported by
people who truly do believe they and they alone care deeply about free speech
has casually stomped on the freedom to speak.

The bill itself would have placed an extra layer of statutory protection over
what should already be (but isn't) protected by the First Amendment"”the right to
buy political advertisements online. As the mess of appalling FEC rules
currently stand, nobody can
legally purchase a broadcast, satellite, or cable advertisement that even
mentions a candidate for federal office within 60 days of a general election (30
days for a primary), unless he or she sets up or joins a political action
committee (PAC) and agrees to abide by the heavy regulations that govern PACs'
funding and disclosure....

I am a friend of free speech, they assure us at every turn, but we
need to draw lines, because when yucky people spend money to communicate a
political message through the news media, it's just like child pornography,
reckless endangerment, and intellectual property theft. Combine this attitude
with a general cluelessness about the unintended speech-impairing
consequences of FEC rule-making, and you get the obscene sight of the New
York Times editorial board, which bathed itself and Judith Miller in the holy
waters of the First Amendment in 15
different editorials, arguing with a straight face that "The bill uses
freedom of speech as a fig leaf."

While I took some shots at the NY Times myself, observing that they seem to be just like every other business facing a new source of competition:  They are running to the government to get the state to quash the upstarts.  However, I missed the wonderful irony that Welch found.  Consider the First Amendment:

Congress shall make no law respecting an establishment of religion, or
prohibiting the free exercise thereof; or abridging the freedom of
speech, or of the press; or the right of the people peaceably to
assemble, and to petition the government for a redress of grievances.

It is indeed amazing that the NY Times believes that these words protect them from cooperating with a criminal investigation and allow them to ignore subpoenas, but believes that these same words do NOT protect political speech on the Internet. 

Extra credit work for those who support campaign finance limitations:  Find the clause in the First Amendment language above the differentiates between speech that was paid for and speech that was not paid for.

I think maybe its time for me to stop reading the news.  What else can a good libertarian do when Republicans oppose free trade, support government intervention in the economy, and spend tax money like drunken sailors while Democrats vote for new restrictions on free speech?

The latter occurred yesterday, as the House failed to get the 2/3 majority necessary to pass the Online Freedom of Speech Act, mostly on the strength on opposition from Democrats (you know, those principled supporters of civil liberties).  Politicians have again shown themselves ready to trash the Constitution in order to limit the speech of those potentially critical to themselves.  Apparently, there is reason to hope, since bill sponsors are trying to bring the bill to the floor in a more routine process that would require only a majority vote for passage (which the bill appears to be able to garner).

My only problem with this initiative is that it falls far short of the mark of protecting all Americans.  Right now, only the major media outlets have full free-speech rights in an election.  This bill would extend free speech to the Internet.  Here's an idea:  Why don't we give everyone back their first amendment rights, as I wrote here:

These past few weeks, we have been debating whether this media
exemption from speech restrictions should be extended to bloggers.  At
first, I was in favor.  Then I was torn.
Now, I am pissed.  The more I think of it, it is insane that we are
creating a 2-tiered system of first amendment rights at all, and I
really don't care any more who is in which tier.  Given the wording of
the Constitution, how do I decide who gets speech and who doesn't - it
sounds like everyone is supposed to:

Congress shall make no law respecting an establishment of religion, or
prohibiting the free exercise thereof; or abridging the freedom of
speech, or of the press; or the right of the people peaceably to
assemble, and to petition the government for a redress of grievances.

I
have come to the conclusion that arguing over who gets the media
exemption is like arguing about whether a Native American in 1960's
Alabama should use the white or the colored-only bathroom:  It is an
obscene discussion and is missing the whole point, that the facilities
shouldn't be segregated in the first place.

By the way, I don't want to ever hear from the NY Times again about some company that is being monopolistic.  The NY Times has opposed the Online Free Speech Initiative from the very beginning in a transparent attempt to quash a competitive media that is stealing readers from it at a very fast clip.  I'm sure they hate having this type stuff on the Internet.  And this is the same NY Times that was one of the very few supporters of the Kelo decision because they were in the midst of getting a new HQ via an eminent domain landgrab.  Reason number 635 I don't agree with giving the press more rights than the rest of us have.

I read an interesting article in the NY Times, via Marginal Revolution, interviewing the CEO of homebuilder Toll Brothers about housing prices.  His assertion was:

"In Britain you pay seven times your annual income for a home; in the U.S. you
pay three and a half." The British get 330 square feet, per person, in their
homes; in the U.S., we get 750 square feet. Not only does Toll say he believes
the next generation of buyers will be paying twice as much of their annual
incomes; in terms of space, he also seems to think they're going to get only
half as much. "And that average, million-dollar insane home in the burbs? It's
going to be $4 million."

I don't necessarily buy this whole story.  For one, Mr. Toll has business reasons for taking a public position that prices will keep rising - after all, his customers buy his product in part as an investment, and would be leery about paying current prices if they thought prices might fall in the future.  Second, as I have talked about a number of times with petroleum, when prices of any product start to rise, observers always tend to underestimate market and technology responses that might bring supply more into balance.

However, the one exception I did make in my oil price posts was that government supply restrictions, both on lands that can be explored for oil as well as things like refinery permitting, may indeed put structural upward pressure on prices.  And in fact, this is where Mr. Toll puts the blame for high housing prices as well:

Toll agrees with Glaeser et
al. that the key force driving up prices is zoning and growth regulations. 
In New Jersey it now takes Toll Brothers up to two million dollars in legal fees
and ten years in time to get the permits necessary to build.

Which got me thinking that home owners (of which I am one) may be the worst rent-seekers of all.  Most people are already familiar with the very large tax breaks for home buyers, in the form of the mortgage interest tax deduction, that is not available to people who rent or to people who borrow for purposes other than home purchase.  However, it may be that a much larger implicit subsidy to home-owners is the government restrictions on new home supply.  By restricting supply, the government is keeping prices up for current home-owners and restricting new entrants who might compete with our homes in the resale market.

In an earlier post, I wrote a defense of price gouging.  Incredibly, one of the best simple summaries of why "profiting off disaster" is actually a good thing comes from the NY Times of all places:

All this, of course, is capitalism at work, moving quickly to get
resources to where they are needed most. And those who move fastest are
likely to do best.

Exactly (by the way, the above is quoted from an Austin Bay post, which was aimed more at criticizing the NY Times for dropping such pro-capitalist sentences from its European version.)

Higher prices for generators and lumber in the disaster area is what tells Home Depot and others that it makes sense to shift lumber and generator inventory to Louisiana from California.  High prices for gas give the following two messages simultaneously and unambiguously to hundreds of millions of people:  "you can make some good money if you can figure out how to get more gas to consumers right now" and "you might want to drive a little less right now". 

Think about that last statement.  Congress has over the last 30 or so years generated numerous energy "plans" and has spent billions of dollars to figure out ways to promote conservation and increased supply.  All of these plans have been expensive failures.  But now, post Katrina, in less than 48 hours, with no one in charge, the market has achieved what Congress could never do.  The least valuable auto-miles will be eliminated, without years of study by Congress to figure out which miles are the least valuable.  The most economic new sources of gasoline will be tapped, without debating in Washington what those sources are.  All bottom-up, with no one ruling the process, by the voluntary self-interested efforts of hundreds of millions of Americans reacting to a simple price signal.

(previous paragraph best read out-loud with someone humming America the beautiful in the background)

Postscript:  Apparently, according to Austin Bay, Texas and more specifically Houston are now the great Satan.   Since I am a white male in my forties who is fairly well-off, still believes in free markets, and was born Houston, Texas, I guess that makes me the ultimate oppressor.

Technorati Tags:  Katrina, Economics